Cabinet okays GB law draft

The cabinet on Thursday approved a draft of the Grameen Bank Act-2013 that would bring the Nobel prize-winning microcredit organisation under the authority of the central bank.

The finance ministry placed the draft at a regular cabinet meeting held at the Secretariat.

According to the draft, the authorised capital of the Grameen Bank was set at Tk 1,000 crore while the paid-up capital at Tk 300 crore.

However, one of the major issues – a cap on tax exemption enjoyed by the GB– was not covered in the law, though the period for the exemption would now be decided by the government.

Talking to The Daily Star earlier, sources at the Bangladesh Bank said they were reluctant to take control of Grameen Bank in their hands.

The Microcredit Regulatory Authority, which regulates microfinance institutions, should get the job, they said.

Earlier on September 30, finance minister AMA Muhith said the government would pass only one more law, the Grameen Bank Act 2013, during its tenure.

He said the law would be passed in the ongoing parliamentary session.

However, there might not be any major changes in the structure of the microcredit bank once the new law takes effect, he added.

According to earlier proposals, the draft would include a provision to cap the tax-exemption privilege for the microlender for a certain period.

Grameen Bank has been enjoying income tax exemption since its inception in 1983, but the privilege ended in December 2010.

The bank then sought extension of the privilege for five more years from January 1, 2011. The government agreed, but the National Board of Revenue began executing the order from July 1, 2011, meaning the bank had to pay income tax for the previous six months.

In May 2011, the government compelled Grameen Bank to pay an advance income tax of Tk 10 crore, and later again granted tax exemption status for 2011-2015, according to the Yunus Centre.